Since their disappointing IPO on May 18, Facebook (FB) shares have lost 27% of their value in a steady decline. Most investors have decided they were smart to stay away from the IPO, at least for now. You can’t argue with the chart.
But I’m sure it’s a little disappointing for some that one of the most-hyped investing stories of the year has turned out to be such a dud. So today I have some other names for investors craving an exciting IPO investment. These stocks all came public within the last two years, but unlike FB, they’re all currently trading above their IPO prices.
Dunkin’ Brands Group (DNKN) came public in late July 2011, and was recommended in the Investment Digest about one month later. The stock struggled for the next five moths, but finally took off this January. Year-to-date, DNKN is up about 35%, beating the broad market by a wide margin.
Dunkin’ Brands is expanding in the U.S., primarily through franchises, and internationally. The company’s first-quarter earnings were good, with EPS increasing 213% on a 9% increase in revenue. For the second quarter in a row, Dunkin’ kept after-tax profit margins above 20%.
And the shares just began paying a dividend in March, which could attract a broader group of investors.
HomeStreet (HMST), a regional bank serving the Pacific Northwest and Hawaii, is the most recent IPO on this list. HMST just came public in February and was recommended by Positive Patterns Editor Bob Howard in the May 16 Investment Digest. It’s traded sideways since then, so investors who are interested could still act on Howard’s recommendation here. Here’s part of what he wrote:
“We think we see good growth in earnings here ahead. HomeStreet operates 20 high-quality bank branches—nine in the Seattle area, two in the North Sound area and four in the South Sound area (15 branches in Washington) plus three in Hawaii and two in Oregon. HomeStreet also operates nine branch loan offices in the same general areas. ...
“HomeStreet has emerged from the 2008 debacle in good shape. And even though the stock has run-up from the recent IPO price, even at $35 I think HMST is still very cheap and has some decent upside. I would buy it up to $38.”
NewLink Genetics (NLNK) came public in a November 2011 IPO. Since then, NLNK is up 88%. NewLink is a development-stage drug company, meaning the stock is going to be speculative for some time. (It currently has a market cap of about $270 million and trades around $13.) But if you can stomach some risk, Salveen Richter, an analyst for Canaccord Genuity, had promising things to say about NewLink’s primary drug candidate in the most recent Investment Digest, published June 6:
“We are assuming coverage of NewLink Genetics Corp. (NLNK) with a BUY rating and a $23 price target. The key value driver is HyperAcute Pancreas (HAP)—a novel immunotherapy in phase three clinical trials for surgically-resected pancreatic cancer. A positive phase two (we recognize it was a single-arm study) in addition to the novel cancer vaccine platform are encouraging as we look toward phase three data (first interim analysis is expected in late 2012/early 2013). We model for peak worldwide HAP sales of $850 million in 2020, of which $635 million is recognized by NLNK. We view the remainder of the pipeline as a free-call option.”
Finally, Metropolitan Health Networks (MDF) is a medical care provider that came public in January 2011. In August 2011, the stock was recommended in the Investment Digest by Upside. Since then, the stock is up 71% (and up 105% since its IPO). But Upside Editor Richard J. Moroney still thinks the stock is a good buy here. Here’s what he wrote in a June 8 update:
“Shares of Metropolitan Health Networks, Inc. (MDF) advanced nicely after Oppenheimer initiated coverage of the managed-care provider with a rating of outperform and a price target of $13, implying 40% upside. Metropolitan, still modestly valued at 11 times expected current-year earnings, is a Best Buy.”
For ongoing updates on all of these outperforming IPOs (and hundreds more high-quality stocks), consider a risk-free trial subscription to the Investment Digest.
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Investment of the Week
